Appendix - Government-Sponsored Enterprises

[Appendix]
[Government-Sponsored Enterprises]
[From the U.S. Government Printing Office, www.gpo.gov]

This chapter contains descriptions of the data on the Government-
sponsored enterprises listed below. These enterprises were established
and chartered by the Federal Government for public policy purposes. They
are not included in the Federal Budget because they are private
companies, and their securities are not backed by the full faith and
credit of the Federal Government. However, because of their public
purpose, detailed statements of financial condition are presented, to
the extent such information is available, on a basis that is as
consistent as practicable with the basis for the budget data of
Government agencies. These statements are not reviewed by the President;
they are presented as submitted by the enterprises.

--The Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation provide assistance to the secondary
market for residential mortgages.

--The Federal Home Loan Banks assist thrift institutions, banks,
insurance companies, and credit unions in providing financing
for housing and community development.

--Institutions of the Farm Credit System, which include the
Agricultural Credit Bank and Farm Credit Banks, provide
financial assistance to agriculture. They are regulated by the
Farm Credit Administration.

--The Federal Agricultural Mortgage Corporation, under the
regulation of the Farm Credit Administration, provides a
secondary mortgage market for agricultural real estate and rural
housing loans as well as for farm and business loans guaranteed
by the U.S. Department of Agriculture.

FEDERAL NATIONAL MORTGAGE ASSOCIATION

Portfolio Programs

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2500-0-3-371 2006 actual 2007 est. 2008 est.
----------------------------------------------------------------------------
1131 Direct loan obligations...........
--------- --------- ----------
1150 Total direct loan obligations.....
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........
Disbursements:

1231 Direct loan disbursements.......
1232 Purchase of loans assets........
1251 Repayments: Repayments and
prepayments.....................
1264 Write-offs for default: Other
adjustments, net................
--------- --------- ----------
1290 Outstanding, end of year........
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information for
2007 and 2008 was not required to be collected.

The Federal National Mortgage Association (Fannie Mae) is a
Government-sponsored enterprise (GSE) in the housing finance market. The
Administration has announced a proposal to strengthen regulation of all
the housing GSEs, including Fannie Mae.
As a housing GSE, Fannie Mae is a Federally chartered, privately
owned company with a public mission to provide stability and to increase
the liquidity of the residential mortgage market and to help increase
the availability of mortgage credit to low- and moderate-income families
and in underserved areas. Fannie Mae engages primarily in two forms of
business: guaranteeing residential mortgage securities and investing in
portfolios of residential mortgages.
The Federal Government has equipped Fannie Mae with certain
advantages over wholly private firms in carrying out these activities.
These include an exemption from State and local taxes (except real
property taxes), and an exemption of its debt and mortgage securities
from Securities and Exchange Commission registration requirements. An
additional advantage is that the Secretary of the Treasury may purchase
and hold up to $2.25 billion of securities issued by Fannie Mae under
terms and conditions and at prices determined by the Secretary to be
appropriate. Securities guaranteed and debt issued by Fannie Mae are
solely the corporation's obligations and are not backed by the full
faith and credit of the U.S. Government. The common stock of the
corporation is owned by the public, is fully transferable, and trades on
the New York, Midwest, and Pacific stock exchanges.
Fannie Mae was established in 1938 to assist private markets in
providing a steady supply of funds for housing. Fannie Mae was
originally a subsidiary of the Reconstruction Finance Corporation and
was permitted to purchase only loans insured by the Federal Housing
Administration (FHA). In 1954, Fannie Mae was restructured as a mixed
ownership (part government, part private) corporation. Legislation
directed the sale of the Government's remaining interest in Fannie Mae
in 1968 and completed the transformation to private shareholder
ownership in 1970. Using the proceeds from the sale of subordinated
debentures, Fannie Mae paid the Treasury $216 million for the
Government's preferred stock, which was retired, and for the Treasury's
interest in the corporation's earned surplus. As a result, the
corporation was taken off the Federal Budget.
In 1992, the Congress reaffirmed and clarified Fannie Mae's role in
the housing finance system through charter act amendments included in
the Federal Housing Enterprises Financial Safety and Soundness Act of
1992 (Act). Fannie Mae's charter purposes, as amended by the Act, are:
``to provide stability in the secondary market for residential
mortgages; respond appropriately to the private capital market; provide
ongoing assistance to the secondary market for residential mortgages
(including activities relating to mortgages on housing for low- and
moderate-income families involving a reasonable economic return that may
be less than the return earned on other activities); and promote access
to mortgage credit throughout the Nation (including central cities,
rural areas, and underserved areas) by increasing the liquidity of
mortgage investments and improving the distribution of investment
capital for residential mortgage financing.'' For additional discussion
and analyses of Fannie Mae, please see the Analytical Perspectives
volume of the Budget documents.

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-2500-0-3-371

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
1101

Fund balances

Investments in US securities:

1102

Treasury securities, par

1104

Other

Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601

Direct loans (net of discount)

1602

Federal Agencies

[[Page 1186]]

1603

Allowance for estimated uncollectible loans and interest (-)

1699

Value of assets related to direct loans

1801

Cash and other monetary assets

1803

Property, plant and equipment, net

1999

Total assets

LIABILITIES:
2101

Accounts payable

2102

Accrued interest payable

2105

Other

2203

Debt

2204

Estimated liability for loan guarantees

2206

Pension and other actuarial liabilities

2207

Subtotal, Federal taxes payable

2999

Total liabilities

NET POSITION:
3300

Cumulative results of operations

3300

Change in Stockholder Equity

3999

Total net position

4999

Total liabilities and net position

-----------------------------------------------------------------------------------------------

Mortgage-Backed Securities

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2501-0-3-371 2006 actual 2007 est. 2008 est.
----------------------------------------------------------------------------
1131 Direct loan obligations...........
--------- --------- ----------
1150 Total direct loan obligations.....
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........
1231 Disbursements: Direct loan
disbursements...................
1251 Repayments: Repayments and
prepayments.....................
--------- --------- ----------
1290 Outstanding, end of year........
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information for
2007 and 2008 was not required to be collected.

According to accounting practices for private corporations, the
mortgages in the pools of loans supporting the mortgage-backed
securities are considered to be owned by the holders of these
securities. Consequently, on the books of Fannie Mae, these mortgages
are not considered assets and the securities outstanding are not
considered liabilities. However, the concepts of the budget of the U.S.
Government consider these mortgages and mortgage-backed securities to be
assets and liabilities, respectively, of Fannie Mae. For the purposes of
this document, therefore, they are presented as assets and liabilities
in the accompanying schedules. On the schedule of Status of Direct Loans
for mortgage-backed securities, the items labeled ``New loans'' and
``Recoveries: Repayments and prepayments'' are budgetary terms. However,
from Fannie Mae's perspective, these items are ``Amounts issued'' and
``Amounts passed through to the holders of securities'', respectively.
Financial data for Fannie Mae is not presented here because Fannie
Mae has not provided audited financial results for 2006.

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-2501-0-3-371

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601

Direct loans, gross

1603

Allowance for estimated uncollectible loans and interest (-)

1699

Value of assets related to direct loans

1999

Total assets

LIABILITIES:
2104

Resources payable

2999

Total liabilities

4999

Total liabilities and net position

-----------------------------------------------------------------------------------------------

FEDERAL HOME LOAN MORTGAGE CORPORATION

Portfolio Programs

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4420-0-3-371 2006 actual 2007 est. 2008 est.
----------------------------------------------------------------------------
1131 Direct loan obligations...........
--------- --------- ----------
1150 Total direct loan obligations.....
----------------------------------------------------------------------------

The Federal Home Loan Mortgage Corporation (Freddie Mac) is a
Government-sponsored enterprise (GSE) in the housing finance market. The
Administration has announced a proposal to strengthen regulation of all
the housing GSEs, including Freddie Mac.
As a housing GSE, Freddie Mac is a Federally-chartered, shareholder-
owned, private company with a public mission to provide stability and
increase the liquidity of the residential mortgage market, and to help
increase the availability of mortgage credit to low- and moderate-income
families and in underserved areas. Freddie Mac engages primarily in two
forms of business: guaranteeing residential mortgage securities and
investing in portfolios of residential mortgages.
The Federal Government has equipped Freddie Mac with certain
advantages over wholly private firms in carrying out these activities.
These advantages include an exemption from State and local taxes (except
real property taxes), and an exemption for its debt and mortgage
securities from Securities and Exchange Commission registration
requirements. An additional advantage is that the Secretary of the
Treasury may purchase and hold up to $2.25 billion of securities issued
by Freddie Mac under terms and conditions and at prices determined by
the Secretary to be appropriate. Securities guaranteed and debt issued
by Freddie Mac are explicitly not backed by the full faith and credit of
the U.S. Government. The common stock of the corporation is owned by
private shareholders, is fully transferable, and trades on the New York
and Pacific stock exchanges.
Freddie Mac was established in 1970 under the Emergency Home Finance
Act. The Congress chartered Freddie Mac to provide mortgage lenders with
an organized national secondary market enabling them to manage their
conventional mortgage portfolio more effectively and gain indirect
access to a ready source of additional funds to meet new demands for
mortgages. Freddie Mac serves as a conduit facilitating the flow of
investment dollars from the capital markets to mortgage lenders, and
ultimately, to homebuyers.
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA) significantly changed the corporate governance of Freddie
Mac. The company's three mem

[[Page 1187]]

ber Board of Directors, which had corresponded with the Federal Home
Loan Bank Board, was replaced with an eighteen member Board of
Directors. In addition, FIRREA converted Freddie Mac's 60 million shares
of non-voting, senior participating preferred stock into voting common
stock.
Financial data for Freddie Mac is not presented here because Freddie
Mac has not provided audited financial results for 2006. For additional
discussion and analyses of Freddie Mac, please see the Analytical
Perspectives volume of the Budget documents.

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4420-0-3-371

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
1201

Investments in other securities, net

1206

Receivables, net

Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601

Direct loans, gross

1603

Allowance for estimated uncollectible loans and interest (-)

1699

Value of assets related to direct loans

1801

Cash and other monetary assets

1803

Property, plant and equipment, net

1901

Other assets

1999

Total assets

LIABILITIES:
2101

Accounts payable

2202

Interest payable

2203

Debt

2207

Other

2999

Total liabilities

NET POSITION:
3100

Invested capital

3999

Total net position

4999

Total liabilities and net position

-----------------------------------------------------------------------------------------------

Mortgage-Backed Securities

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4440-0-3-371 2006 actual 2007 est. 2008 est.
----------------------------------------------------------------------------
1111 Limitation on direct loans........
1131 Direct loan obligations...........
--------- --------- ----------
1150 Total direct loan obligations.....
----------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4440-0-3-371

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
1901

Underlying Mortgages

1999

Total assets

LIABILITIES:
2104

Resources payable

2999

Total liabilities

-----------------------------------------------------------------------------------------------

FEDERAL HOME LOAN BANK SYSTEM

Federal Home Loan Banks

Status of Direct Loans (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4200-0-3-371 2006 actual 2007 est. 2008 est.
-----------------------------------------------------------------------------------------------
1131 Direct loan obligations........... 7,475,995
------------ -------------- ------------
1150 Total direct loan obligations..... 7,475,995
--------------------------------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 722,553
1231 Advances made to members and
mortgage loans purchased from
members......................... 7,475,995
1251 Principal collected on advances
and mortgage loans.............. -7,453,327
1261 Change in market value adjustments
associated with Statement of
Financial Accounting Standards
No. 133......................... -7,328
------------ -------------- ------------
1290 Outstanding, end of year........ 743,855
-----------------------------------------------------------------------------------------------

The Federal Home Loan Bank System is a Government-sponsored
enterprise (GSE) in the housing finance market. The Administration has
announced a proposal to strengthen regulation of all the housing GSEs,
including the Federal Home Loan Bank System.

The Federal Home Loan Banks were chartered by the Federal Home Loan
Bank Board under the authority of the Federal Home Loan Bank Act of 1932
(Act). The 12 Federal Home Loan Banks (FHLBanks) are under the
supervision of the Federal Housing Finance Board (FHFB). The common
mission of FHLBanks is to facilitate the extension of credit through
their members. To accomplish this mission, FHLBanks make loans, called
advances, and provide other credit products and services to their 8,149
member commercial banks, savings associations, insurance companies, and
credit unions. Advances and letters of credit must be fully secured by
eligible collateral and long-term advances may be made only for the
purpose of providing funds for residential housing finance. However,
``community financial institutions'' may also use long-term advances to
finance small businesses, small farms, and small agribusinesses.
Additionally, specialized advance programs provide funds for community
reinvestment and affordable housing programs. All regulated financial
depositories and insurance companies engaged in residential housing
finance are eligible for membership. Each FHLBank operates in a
geographic district designated by the Board and together FHLBanks cover
all of the United States, as well as the District of Columbia, Puerto
Rico, the Virgin Islands, Guam, American Samoa, and the Northern Mariana
Islands.

The principal source of funds for the lending operation is the sale
of consolidated obligations to the public. The consolidated obligations
are not guaranteed by the U.S. Government as to principal or interest.
Other sources of lendable funds include members' deposits and capital.
Funds not immediately needed for advances to members are invested.

The capital stock of the Federal Home Loan Banks is owned entirely
by the members. Initially the U.S. Government purchased stock of the
banks in the amount of $125 million. The banks had repurchased the
Government's investment in full by mid-1951.

The Act, as amended in 1989, requires each FHLBank to operate an
Affordable Housing Program (AHP). Each FHLBank provides subsidies in the
form of direct grants or below-market rate advances for members that use
the funds for qualifying affordable housing projects. Each of the
FHLBanks must set aside annually the greater of $100 million or 10
percent of its previous year's net earnings for the AHP. The Act, as
amended in 1999, also requires that

[[Page 1188]]

FHLBanks contribute 20 percent of net earnings annually to assist in the
payment of interest on bonds issued by the Resolution Funding
Corporation.

In 2002, the Administration requested all GSEs, including FHLBanks,
to voluntarily register their equity securities with the Securities and
Exchange Commission (SEC). This voluntary registration is part of the
Administration's efforts to have GSEs undergo the same scrutiny process
as other corporate enterprises. FHFB adopted a rule on June 23, 2004
that requires each FHLBank to register a class of its stock. All of the
Federal Home Loan Banks complied by 2006. (Freddie Mac has failed to
commence registration with SEC, in spite of its prior commitment to do
so. Fannie Mae registered with the SEC effective March 31, 2003, but has
not filed financial statements for 2005 or 2006.)

For additional discussion and analyses of the FHLBanks, please see
the Analytical Perspectives volume of the Budget.

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4200-0-3-371

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
Investments in US securities:

1102

Treasury securities, net

103

102

1201

Investments in other securities, net

260,037

274,926

1206

Accounts receivable

3,246

4,186

1401

Net value of assets related to direct loans receivable

722,542

743,849

1801

Cash and other monetary assets

346

329

1803

Property, plant and equipment, net

199

208

1901

Other assets

1,447

1,890

1999

Total assets

987,920

1,025,489

LIABILITIES:
2101

REFCORP and Affordable Housing Program

896

715

2202

Interest payable

6,029

8,061

2203

Debt issued under borrowing authority

904,945

944,039

2207

Deposit funds and other borrowings

19,235

18,210

2207

Other

12,354

8,910

2999

Total liabilities

943,459

979,935

NET POSITION:
3100

Invested capital

44,461

45,554

3999

Total equity

44,461

45,554

4999

Total liabilities and equity

987,920

1,025,489

-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information for
2007 and 2008 was not required to be collected.

FARM CREDIT SYSTEM

The Farm Credit System is a Government-sponsored enterprise that
provides privately financed credit to agricultural and rural
communities. The major functional entities of the system are: 1)
Agricultural Credit Bank (ACB); 2) Farm Credit Banks (FCB); and 3)
direct lender associations. The history and specific functions of the
bank entities are discussed after the presentation of financial
schedules for each bank entity. As part of the Farm Credit System (FCS),
these entities are regulated and examined by the Farm Credit
Administration (FCA), an independent Federal agency. The administrative
costs of FCA are financed by assessments of system institutions and the
Federal Agricultural Mortgage Corporation. System banks finance loans
from sales of bonds to the public and their own capital funds. The
system bonds issued by the banks are not guaranteed by the U.S.
Government either as to principal or interest. The bonds are backed by
an insurance fund, administered by the Farm Credit System Insurance
Corporation (FCSIC), an independent Federal agency that collects
insurance premiums from member banks to pay its administrative expenses
and fund insurance reserves. All of the banks' current operating
expenses are paid from their own income and do not require budgetary
resources from the Federal Government.

Agricultural Credit Bank

CoBank, ACB is headquartered in Denver, Colorado and serves eligible
cooperatives nationwide, and provides funding to Agricultural Credit
Associations (ACAs) in two of its regions. CoBank, ACB is the only
Agricultural Credit Bank (ACB) in the Farm Credit System. An ACB
operates under statutory authority that combines the authorities of a
Farm Credit Bank (FCB) and a Bank for Cooperatives (BC). In exercising
its FCB authority, CoBank, ACB's charter limits its lending to ACAs
located in the northeast and northwest regions of the country. As an
entity lending to Cooperatives, CoBank is independently chartered to
provide credit and related services nationwide to eligible cooperatives
primarily engaged in farm supply, grain, marketing, and processing
(including sugar and dairy). CoBank also makes loans to rural utilities,
including telecommunications companies and it provides international
loans for the financing of agricultural exports.

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4130-0-3-351 2006 actual 2007 est. 2008 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations........... 95,437 101,162 107,737
--------- --------- ----------
1150 Total direct loan obligations... 95,437 101,162 107,737
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 25,122 28,764 30,476
1231 Disbursements: Direct loan
disbursements................... 95,436 101,162 107,737
1251 Repayments: Repayments and
prepayments..................... -91,803 -99,430 -105,737
Write-offs for default:

1263 Direct loans.................... -20 -20
1264 Other adjustments, net.......... 9
--------- --------- ----------
1290 Outstanding, end of year........ 28,764 30,476 32,456
---------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4130-0-
3-351

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
Non-Federal assets:

1201

Cash and investment securities

7,184

7,752

1206

Accrued interest receivable on loans

169

220

Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601

Direct loans, gross

25,122

28,763

1603

Allowance for estimated uncollectible loans and interest (-)

-435

-441

1699

Value of assets related to direct loans

24,687

28,322

1803

Other Federal assets: Property, plant and equipment, net

261

375

1999

Total assets

32,301

36,669

LIABILITIES:
2104

Federal liabilities: Resources payable

675

467

Non-Federal liabilities:

2201

Consolidated systemwide and other bank bonds

28,342

32,547

2201

Notes payable and other interest-bearing liabilities

124

300

2202

Accrued interest payable

253

372

2999

Total liabilities

29,394

33,686

NET POSITION:
3300

Cumulative results of operations

2,907

2,983

3999

Total net position

2,907

2,983

4999

Total liabilities and net position

32,301

36,669

-----------------------------------------------------------------------------------------------

Statement of Changes in Net Worth (in thousands of dollars)

-----------------------------------------------------------------------------------------------
99-4130 2005 actual 2006 actual 2007 est. 2008 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 2,869,656 2,907,259 2,982,698 3,074,000
============ ============== ============ =============

Capital stock and participations
issued.............................. 6,269 5,368 1,000 1,000
Capital stock and participations
retired............................. 67,534 71,242 51,113 44,590
Net income............................ 281,828 328,086 334,200 336,300
Cash/Dividends/Patronage Distributions -152,720 -174,335 -177,777 -171,710
Other, net............................ -30,240 -12,438 -15,008 -22,000
------------ -------------- ------------ -------------

[[Page 1189]]

Ending balance of net worth............. 2,907,259 2,982,698 3,074,000 3,173,000
-----------------------------------------------------------------------------------------------

Financing Activities (in thousands of dollars)

--------------------------------------------------------------------
99-4130 2005 actual 2006 actual 2007 est. 2008 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligations........................... 26,040,303 28,341,749 32,546,980 34,496,938
============== ============== ============= ==============

Consolidated systemwide and other bank
bonds issued........................ 11,221,891 11,240,664 11,915,104 12,689,586
Consolidated systemwide and other bank
bonds retired....................... 9,378,220 8,853,321 10,165,146 10,658,879
Consolidated systemwide notes, net.... 311,845 1,817,888 200,000 250,000
Other (Net)........................... 145,930 0 0 0
-------------- -------------- ------------- --------------

Ending balance of outstanding system
obligations........................... 28,341,749 32,546,980 34,496,938 36,777,645
-------------------------------------------------------------------------------------------------------

Farm Credit Banks

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4160-0-3-371 2006 actual 2007 est. 2008 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations........... 140,542 150,395 160,184
--------- --------- ----------
1150 Total direct loan obligations... 140,542 150,395 160,184
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 66,801 76,184 80,948
1231 Disbursements: Direct loan
disbursements................... 140,541 151,043 160,858
1251 Repayments: Repayments and
prepayments..................... -131,156 -146,279 -155,400
Write-offs for default:

1263 Direct loans.................... -2
1264 Other adjustments, net..........
--------- --------- ----------
1290 Outstanding, end of year........ 76,184 80,948 86,406
---------------------------------------------------------------------------
Note.--Loans outstanding at end of year do not include nonaccrual
loans and sales contracts.

The Agricultural Credit Act of 1987 (1987 Act) required the Federal
Land Banks (FLBs) and Federal Intermediate Credit Banks (FICBs) to merge
into a Farm Credit Bank (FCB) in each of the 12 Farm Credit districts.
FCBs operate under statutory authority that combines the prior
authorities of a FLB and of a FICB. No merger occurred in the Jackson
district in 1988 because the FLB of Jackson was in receivership.
Pursuant to section 410(e) of the 1987 Act, as amended by the Farm
Credit Banks Safety and Soundness Act of 1992, FICB of Jackson merged
with FCB of Columbia on October 1, 1993. Mergers and consolidations of
FCBs across district lines that began in 1992 have continued to date. As
a result of this restructuring activity, 4 FCBs, headquartered in the
following cities, remain: AgFirst FCB, Columbia, South Carolina;
AgriBank FCB, St. Paul, Minnesota; U.S. AgBank, FCB, Wichita, Kansas;
and FCB of Texas, Austin, Texas.
FCBs serve as discount banks and as of October 1, 2006 provided
funds to 9 Federal Land Credit Associations (FLCA) and 86 Agricultural
Credit Associations (ACAs). These direct lender associations, in turn,
make short-term production loans and long-term real estate loans to
eligible farmers and ranchers, and their cooperatives; farm-related
businesses; and rural homeowners. FCBs can also lend to local financing
institutions, including commercial banks, as authorized by the Farm
Credit Act of 1971, as amended.
All the capital stock of FICB's, from organization in 1923 to
December 31, 1956, was held by the U.S. Government. The 1956 Act
provided a long-range plan for the eventual ownership of the credit
banks by the production credit associations and the gradual retirement
of the Government's investment in the banks. This retirement was
accomplished in full on December 31, 1968. The last of the Government
capital that had been invested in FLB's was repaid in 1947.

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4160-0-
3-371

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
Non-Federal assets:

1201

Cash and investment securities

19,513

23,353

1206

Accrued Interest Receivable

581

819

Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601

Direct loans, gross

66,801

76,185

1603

Allowance for estimated uncollectible loans and interest (-)

-19

-4

1699

Value of assets related to direct loans

66,782

76,181

1803

Other Federal assets: Property, plant and equipment, net

321

423

1999

Total assets

87,197

100,776

LIABILITIES:
2104

Federal liabilities: Resources payable

397

386

Non-Federal liabilities:

2201

Consolidated systemwide and other bank bonds

80,993

93,939

2201

Notes payable and other interest-bearing liabilities

368

437

2202

Accrued interest payable

592

884

2999

Total liabilities

82,350

95,646

NET POSITION:
3300

Cumulative results of operations

4,847

5,130

3999

Total net position

4,847

5,130

4999

Total liabilities and net position

87,197

100,776

-----------------------------------------------------------------------------------------------

Statement of Changes in Net Worth (in thousands of dollars)

-----------------------------------------------------------------------------------------------
99-4160 2005 actual 2006 actual 2007 est. 2008 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 4,520,633 4,846,675 5,129,876 5,347,437
============ ============== ============ =============

Capital stock and participations
issued.............................. 237,099 223,860 70,342 102,225
Capital stock and participations
retired............................. 118,560 108,125 0 0
Surplus Retired....................... 4,257 2,462 0 0
Net income............................ 521,660 503,366 509,823 538,784
Cash/Dividends/Patronage Distributions -286,298 -349,463 -353,232 -363,159
Other, net............................ -23,602 16,025 -9,372 -17,863
------------ -------------- ------------ -------------
Ending balance of net worth............. 4,846,675 5,129,876 5,347,437 5,607,424
-----------------------------------------------------------------------------------------------

Financing Activities (in thousands of dollars)

--------------------------------------------------------------------
99-4160 2005 actual 2006 actual 2007 est. 2008 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligations........................... 71,077,982 80,993,251 93,938,983 99,597,895
============== ============== ============= ==============

Consolidated systemwide and other bank
bonds issued........................ 37,670,028 33,379,481 33,097,334 35,106,879
Consolidated systemwide and other bank
bonds retired....................... 28,143,701 22,985,482 28,063,935 29,630,728
Consolidated systemwide notes, net.... 383,675 2,551,733 625,513 667,335
Other, net............................ 5,267 0 0 0
-------------- -------------- ------------- --------------

Ending balance of outstanding system
obligations........................... 80,993,251 93,938,983 99,597,895 105,741,381
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Federal Agricultural Mortgage Corporation

(Farmer Mac)

Farmer Mac is authorized under the Farm Credit Act of 1971 (Act), as
amended by the Agricultural Credit Act of 1987, to create a secondary
market for agricultural real estate and rural home mortgages. The Farmer
Mac title of the Act was amended by the 1990 farm bill to authorize
Farmer Mac to purchase, pool, and securitize the guaranteed portions of
farmer program, rural business, and community development loans
guaranteed by the United States Department of Agriculture (USDA). The
Farmer Mac title was further amended in 1991 to clarify Farmer Mac's
authority to issue debt obligations, provide for the establishment of
minimum capital standards, establish the Office of Secondary Market
Oversight at the Farm Credit Administration (FCA), and expand the
agency's rulemaking authority. Most recently, the Farm Cred

[[Page 1190]]

it System Reform Act of 1996 (1996 Act) amended the Farmer Mac title to
allow Farmer Mac to purchase loans directly from lenders and to issue
and guarantee mortgage-backed securities without requiring that a
minimum cash reserve or subordinated (first loss) interest be maintained
by poolers as had been required under its original authority. The 1996
Act expanded FCA's regulatory authority to include provisions for
establishing a conservatorship or receivership, if necessary, and
provided for increased core capital requirements at Farmer Mac phased in
over three years.
Farmer Mac operates through two core programs, ``Farmer Mac I,''
which involves mortgage loans secured by first liens on agricultural
real estate or rural housing (qualified loans), and ``Farmer Mac II,''
which involves the guaranteed portions of USDA guaranteed loans. Farmer
Mac operates by: i) purchasing, or committing to purchase, newly
originated or existing qualified loans or guaranteed portions from
lenders; ii) purchasing ``AgVantage'' bonds backed by qualified loans or
guaranteed portions from lenders; and iii) exchanging qualified loans or
guaranteed portions for guaranteed securities. Loans purchased by Farmer
Mac are aggregated into pools that back Farmer Mac guaranteed securities
which are held by Farmer Mac or sold into the capital markets. Farmer
Mac is intended to attract new capital for financing qualified loans and
guaranteed portions, foster increased long-term, fixed-rate lending, and
provide greater liquidity to agricultural and rural lenders.
Farmer Mac is governed by a 15 member Board of Directors. Ten Board
members are elected by stockholders, including five by the Farm Credit
System and five by commercial lenders. Five are appointed by the
President, subject to Senate confirmation.

Financing

Financial support and funding for Farmer Mac's operations come from
several sources: sale of common and preferred stock; issuance of debt
obligations; and net income. Under procedures specified in the Act,
Farmer Mac may issue obligations to the U.S. Treasury in a cumulative
amount not to exceed $1.5 billion to fulfill its guarantee obligations.
As of September 30, 2006, Farmer Mac's core capital exceeded
statutory requirements. Additionally, Farmer Mac's regulatory capital
(core capital plus the allowance for loan losses) exceeded the amount of
required regulatory capital as determined by the risk-based capital
rule, with which Farmer Mac was required to be in compliance on May 23,
2002.

Guarantees

Farmer Mac provides a guarantee of timely payment of principal and
interest on securities backed by qualified loans or pools of qualified
loans. These securities are not guaranteed by the United States, and are
not ``government securities''.
Farmer Mac is subject to reporting requirements under securities
laws and its guaranteed mortgage-backed securities are subject to
registration with the Securities and Exchange Commission under the 1933
and 1934 Securities Acts.

Regulation

Farmer Mac is Federally regulated by FCA, acting through its Office
of Secondary Market Oversight (OSMO). FCA is responsible for the
supervision, examination of, and rulemaking for Farmer Mac.

Status of Guaranteed Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4180-0-3-351 2006 actual 2007 est. 2008 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on commitments:
2111 Limitation on guaranteed loans....
2131 Guaranteed loan commitments....... 2,907
--------- --------- ----------
2150 Total guaranteed loan
commitments................... 2,907
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Cumulative balance of guaranteed loans
outstanding:
2210 Outstanding, start of year........ 5,126 7,058 7,058
2231 Disbursements of new guaranteed
loans........................... 2,907
2251 Repayments and prepayments........ -975
--------- --------- ----------
2290 Outstanding, end of year........ 7,058 7,058 7,058
----------------------------------------------------------------------------

Memorandum:
2299 Guaranteed amount of guaranteed
loans outstanding, end of year.. 901
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Balance Sheet (in millions of dollars)

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Identification code 99-4180-0-
3-351

2005 actual

2006 actual

-----------------------------------------------------------------------------------------------
ASSETS:
Non-Federal assets:

1201

Investment in securities

1,594

1,896

1206

Receivables, net

Net value of assets related to
direct loans receivable:

1401

Direct loans receivable, gross

2,140

2,084

1402

Interest receivable

1499

Net present value of assets related to direct loans

2,185

2,136

1801

Other Federal assets: Cash and other monetary assets

438

805

1999

Total assets

4,258

4,893

LIABILITIES:
Non-Federal liabilities:

2201

Accounts payable

2202

Interest payable

2203

Debt

3,931

4,554

2204

Liabilities for loan guarantees

2999

Total liabilities

4,022

4,648

NET POSITION:
3300

Invested capital

236

245

3999

Total net position

236

245

4999

Total liabilities and net position

4,258

4,893

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